AUD/USD and NZD/USD Fundamental Daily Forecast – Theresa May Defeat Pressures Kiwi
The New Zealand Dollar is trading lower early Wednesday after closing sharply higher the previous session. The currency was supported early in the session on Monday on news that UK Prime Minister Theresa May had secured changes from the European Commission on her Brexit deal.
However, the bullishness created by this news came to a screeching halt late in the session after May’s deal was defeated in the House of Commons by 149 votes. The Members of Parliament (MP) will now have a free vote on Wednesday on whether to leave the European Union without a deal.
At 00:42 GMT, the NZD/USD is trading .6853, down 0.0081 or -0.12%.
What happens next doesn’t seem to be clear to anyone, which means be prepared for heightened volatility. Lawmakers could vote for a third time on May’s deal either before or after a deadline extension, leave without a deal although it is highly uncertain, or take the problem back to the public with a second referendum or general election.
In other news, U.S. consumer prices rose for the first time in four months in February, but the pace of the increase was modest, resulting in the smallest annual gain in nearly 2-1/2 years. The news likely means the U.S. Federal Reserve will continue its-wait-and-see approach to further monetary policy tightening this year.
Early Wednesday, Statistics New Zealand released its Food Price Index (FPI) for February. The report showed a 0.4% boost in inflation versus the previously reported 1.0%. Traders showed little reaction to the news since it represented the second best reading since August 2018.
Daily Forecast
On Wednesday, traders will continue to monitor the situation in the UK over Brexit. All eyes also continue to be on US-China trade negotiations, which continue to progress without making any tradable headlines. Recent comments from US Trade Representative Robert Lighthizer have noted that both economic powerhouses are close to a deal while offering little details on how close.
In the U.S., traders will get the opportunity to react to the latest data on Core Durable Goods Orders, Producer Price Inflation and Construction Spending.
Core Durable Goods Orders are forecast to have risen 0.1%, Durable Goods Orders are predicted to have fallen 0.5%. PPI and Core PPI are expected to have risen 0.2%. Construction Spending is forecast to have risen 0.4%.
Kiwi traders will also be keying Thursday’s reports from China including Fixed Asset Investment, Industrial Production, Retail Sales and the Unemployment Rate.
This article was originally posted on FX Empire
